Serbia’s CBAM Exposure Nears €3 Billion as EU Carbon Rules Expand

Serbia’s exposure to the European Union’s Carbon Border Adjustment Mechanism (CBAM) is set to expand significantly as the EU moves from its initial industrial focus toward a wider range of manufactured products. Based on 2025 trade data, exports currently covered by the mechanism were valued at approximately €2.07 billion, while the European Commission’s proposed downstream expansion could add another €894 million, bringing the measurable exposure perimeter to around €2.97 billion.

The combined value represents approximately 15.1% of Serbia’s goods exports to the EU, before accounting for possible changes to the final product list following negotiations between the European Commission, the Council of the EU and the European Parliament.

Serbia entered the definitive CBAM period on 1 January 2026, with the initial scope focused on iron and steel, aluminium, electricity, fertilisers and cement. The first phase affects a relatively concentrated group of large industrial exporters, while the planned expansion from 1 January 2028 would extend the mechanism to machinery, electrical equipment, commercial-vehicle components, household appliances and other metal-intensive products.

Current CBAM Scope Covers €2.07 Billion in EU Exports

The value of products currently within the legal CBAM scope increased from an estimated €1.82 billion in 2024, representing annual growth of approximately 14%. The largest category was iron and steel, with exports estimated at €912 million, accounting for 44% of the current CBAM-related export value. Electricity followed with approximately €531 million, or 25.6%, while aluminium contributed around €519 million, representing 25.1%.

Fertiliser exports amounted to approximately €104 million, cement exports to around €5 million, and hydrogen exports remained below €1 million. The CBAM trade value does not represent the future carbon payment obligation. The actual financial impact depends on embedded emissions, the EU Emissions Trading System carbon price, the reduction of free allocations available to EU producers and any recognised carbon costs already paid in the exporting country.

Export values identify the commercial exposure because affected companies will need verified emissions data, production records, precursor traceability and reliable information exchange with authorised EU CBAM declarants.

Trade Growth Increases Importance of Carbon Compliance

Serbia’s CBAM exposure is developing alongside stronger trade links with the EU and increasing reliance on imported industrial inputs from non-EU suppliers. During January–May 2026, Serbian goods exports increased 16.6% year on year to $17.17 billion. Exports to the EU rose 18.7% to $10.84 billion, increasing the bloc’s share of Serbian exports from 62.0% to 63.1%.

Imports grew 9.3% to $20.66 billion during the same period. Imports from China reached $3.15 billion, increasing 16.9%, while imports from Türkiye amounted to $1.08 billion, up 17.5%. The interaction between EU market access, foreign-owned manufacturing capacity and imported industrial inputs places CBAM directly within Serbia’s export model. The first stage affects large industrial facilities, while the next phase will reach broader manufacturing supply chains built around European customers.

Serbia recorded approximately €33 billion in goods exports in 2025, while imports reached around €41.8 billion. Exports to the EU were valued at approximately €19.7 billion, meaning current CBAM-covered products represented about 10.5% of Serbia’s EU-bound merchandise exports.

Industrial Companies Face First-Wave Compliance Requirements

Current exposure is concentrated among several major industrial systems. HBIS Serbia’s Smederevo steelworks represents a central part of the iron and steel category, alongside Metalfer Steel Mill in Sremska Mitrovica and Serbian producers of rolled products, tubes, structures, fasteners and fabricated steel components.

Aluminium exposure is linked to Impol Seval and downstream processors. Fertiliser-related exposure is concentrated around Elixir Group’s production facilities in Prahovo and Šabac. Electricity exposure involves EPS, regional electricity traders and cross-border power flows. Cement-related exports include production by Lafarge Serbia, Moravacem and Titan Cementara Kosjerić.

The main EU destinations for current CBAM-scope exports in 2025 were Romania with approximately €420 million, Czechia with €218 million, Hungary with €212 million, Germany with €186 million, Bulgaria with €181 million, Croatia with €162 million, Poland with €153 million, Italy with €133 million, Slovakia with €110 million, and Austria with around €76 million. Romania and Hungary have larger shares because electricity and regional metals trade represent a significant part of the existing mechanism. Germany, Italy, Czechia, Poland and Slovakia are more closely connected with Serbian manufacturing supply chains.

Proposed Expansion Adds Manufacturing Supply Chains

The European Commission’s December 2025 proposal would introduce approximately 180 steel- and aluminium-intensive product lines from 1 January 2028. Around 94% of the proposed additions are industrial supply-chain products, with average steel and aluminium content estimated at 79%. Household products represent approximately 6% of the planned expansion.

The proposed categories include fabricated metal products such as nails, staples, fencing, wire ropes, springs, cast products, caps, lids and fittings. The expansion also covers machinery and industrial equipment, including diesel engines, fuel and cooling pumps, centrifugal pumps, furnace burners, winches, hoists, jacks, cranes, conveyors, industrial robots, handling equipment, agricultural machinery, construction equipment, foundry machinery, stone-working and mineral-processing equipment.

Electrical categories include motors, transformers, inductors, welding equipment and selected electrical conductors. Transport-related products include goods vehicles, chassis, bodies, gearboxes, wheels, suspension systems and radiators. Medical instruments, metal furniture and prefabricated structures are also included among the proposed product categories.

Based on Serbia’s 2025 trade structure, these additions would increase measurable EU-bound CBAM exposure by approximately €894 million. The combined current and proposed perimeter reaches around €2.97 billion, equivalent to 15.1% of Serbia’s exports to the EU.

Germany Becomes Key Market Under Downstream Expansion

The proposed downstream phase changes the geographic profile of exposure. Germany becomes the largest destination for potentially covered downstream Serbian goods, with estimated exports of approximately €270 million. The Netherlands follows with €129 million, Slovenia with €107 million, Hungary with €69 million, Italy with €64 million, Poland with €45 million, Slovakia with €33 million, Croatia and Austria with around €28 million each, and Czechia with approximately €21 million. The shift reflects the move from an upstream metals and electricity mechanism toward a broader manufacturing supply-chain system.

Companies with relevant Serbian production profiles include ZF Serbia, Bosch, Siemens Mobility, Grundfos, Johnson Electric, Hisense/Gorenje, Metalac and a wider network of automotive, electrical, machinery and fabricated-metal suppliers operating around Kragujevac, Novi Sad, Niš, Pančevo, Subotica and Belgrade. The final impact cannot be determined at company level without reviewing exact customs codes and product compositions. Individual manufacturers may produce multiple product groups, with only some falling under the final CBAM rules.

Imported Materials Create Additional Supply-Chain Requirements

Serbia’s growing imports from China and Türkiye add another layer of complexity. In 2025, Serbian imports from China were approximately €6.43 billion, while imports from Türkiye reached about €2.19 billion. Products already included in current CBAM categories represented an estimated €464 million of Chinese imports and €382 million of Turkish imports.

The proposed downstream categories would add approximately €346 million of imports from China and €183 million from Türkiye. Combined current and proposed product-code exposure reaches around €810 million for China and €565 million for Türkiye, creating a total potential precursor and re-export perimeter of approximately €1.38 billion.

These figures do not show that every imported product enters EU-bound Serbian exports. Public customs data cannot directly link imported steel, aluminium, machinery components or electrical equipment to specific finished export products. Exposure arises when covered goods are re-exported to the EU, when imported materials become precursors in complex Serbian products, or when processing in Serbia is insufficient to establish Serbian non-preferential origin. Repacking, relabelling, minor finishing and simple assembly do not automatically transform Chinese or Turkish origin into Serbian origin.

Companies Must Build Verified Emissions Data Systems

The CBAM framework requires product-level and installation-level information rather than general corporate emissions reporting. Exporters must identify the production facility, materials consumed, emissions embedded in precursor inputs and the allocation of emissions to exported quantities.

For many Serbian companies, the challenge will be integrating operational data from different departments. Procurement records, production documentation, energy consumption data, customs classifications and environmental calculations must be combined into a single auditable system. A compliant approach requires identifying production boundaries, confirming customs classifications, calculating direct and relevant indirect emissions, mapping precursor inputs, reconciling production and sales data, documenting calculation methods and maintaining evidence for EU importers and verifiers.

Contracts with Chinese and Turkish suppliers may increasingly require emissions information, installation identification, production-route details, verification rights and data-retention obligations.

Financing and Export Contracts Face New Carbon Requirements

The impact of CBAM extends beyond certificate costs. EU customers may introduce carbon-cost clauses, retain payments pending verification or require adjustments when emissions data are incomplete. Banks financing Serbian exporters may increasingly assess whether EU receivables are protected from carbon-related deductions. Lending structures may distinguish between export revenues supported by verified CBAM documentation and those exposed to uncertain default emissions calculations.

Companies investing in lower-carbon production will need measurable data showing the impact of efficiency improvements, renewable electricity use, process changes or lower-carbon material sourcing. Renewable electricity contracts, guarantees of origin or I-REC certificates alone do not establish CBAM compliance without appropriate metering, contractual structures and verification procedures.

Serbia’s immediate CBAM exposure remains concentrated in the €2.07 billion of exports already covered by the mechanism, while the proposed manufacturing expansion adds another €894 million of potential exposure. The combined perimeter of approximately €2.97 billion places emissions data management, supplier transparency and carbon compliance increasingly within the framework of industrial competitiveness and export financing.

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